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Black-owned banks dip as shareholders bail

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Black-owned banks dip
Black-owned banks dip

The extent of black ownership in the banking sector has decreased significantly as major empowerment schemes in the industry have expired and black shareholders have sold out.

This is according to the Transformation Report, released this week by the Banking Association of SA (Basa).

The economic interest owned by black people dropped from 30.1% in 2016 to 25.3% in 2017.

The report was commissioned by Basa and conducted by Intellidex. It said that between 2016 and 2017 a number of black shareholders, who gained ownership of the sector through black empowerment schemes, had sold their stakes.

“The reported ownership of banks declined between 2016 and 2017, using the measurement approach of the financial sector code black,” said Basa managing director Cas Coovadia.

“The decline reflects the continued exit of black shareholders, who received shares through black empowerment schemes established by the large banks in 2005. Most of those matured in 2015 at which point beneficiaries were free to dispose of their interests,” he said.

banks
Middle management across banks (like for like, 2016 vs 2017)

Of the large banks, African Bank was the only major bank to report an increase in black ownership – from 11.2% in 2016 to 29.2% in 2017.

FirstRand and Grindrod reported marginally higher black ownership – the only other banks to do so.

Only nine banks reported on their black economic interest, with the rest of the banks held by foreign investors and therefore not reflecting any black ownership.

“The decline in economic interest has been less pronounced among black women. FirstRand, Investec and Capitec all reported increases,” Coovadia said.

He said Basa was working hard to ensure the targets set out in the 2017 financial sector codes were met and there was an ongoing review of the transformation targets.

“The codes do not only require us to make the employees, managers and ownership of financial institutions more representative of the people, but also to contribute to the growth, development and transformation of the entire economy.

“Banks have a unique responsibility among the social partners that determine the course of the economy,” Coovadia said.

banks
Black ownership percentage of banks (like for like, 2016 vs 2017)

The report indicated that banks employed about 158 000, including 54 000 junior managers of which 84% were black; the proportion of black directors managing banks was at 24%, a 5% increase from 2016.

Asked why black economic empowerment shares could not be transferred to other black hands, Khulekani Mathe, head of the transformation and financial inclusion division at Basa, said banks had no right to tell shareholders who exited who to sell to.

“The shareholders have rights like any other shareholder and cannot be dictated to about who they should sell to,” he said.

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